© Reuters. FILE PHOTO: Visitors look at an electronic listing board at the Tokyo Stock Exchange (TSE) in Tokyo, Japan, October 1, 2018. REUTERS / Toru Hanai
By Andrew Galbraith
SHANGHAI (Reuters) – Asian stocks fell on Friday, continuing their largest monthly decline since the peak of global pandemic lockdowns last March amid ongoing investor concerns over regulatory crackdowns on China’s education, real estate and technology sectors.
The losses even exacerbated after assurances from Chinese regulators and official media, which calmed investors’ nerves the day before, and after indications from the US Federal Reserve that their bond purchase program will remain unchanged for the time being.
A sustained outbreak of delta variant COVID-19 cases in China’s coastal Jiangsu province also weighed on sentiment on Friday.
Futures indicated a lower opening for European equity markets. fell 0.8%, Germany fell 0.79% and futures were down 0.68%.
“It is clear that investors are deeply shaken by the regulatory action,” said Michael Frazis, portfolio manager at Frazis Capital Partners in Sydney, adding that the market remains under short-term pressures.
“You’re going to be talking about tapering, and you have many coronavirus beneficiaries who are mostly in the technology sector. The (earnings) growth will be slow and they will report numbers of very high underlying values for that period last year. .. We assume that the tech indices will be challenged in the short term, but are very optimistic in the medium and long term. “
On Friday, MSCI’s broadest index for Asia Pacific stocks outside of Japan fell 1.33%, bringing its monthly losses to over 7%. declined 1.80% for the eleventh consecutive month of declines on the last trading day of the month.
Chinese blue chips fell 1.06% and Hong Kong’s fell 2.11%, with technology stocks falling again. The Hang Seng Tech Index lost more than 4%, compounding its decline to more than 18% for the month. Seoul’s Kospi fell 1.16%.
The slump in Asia came despite robust US earnings and forecasts, as well as strong economic growth numbers for the second quarter, which helped propel Wall Street to intraday highs on Thursday.
The U.S. economy grew above pre-pandemic levels in the second quarter, aided by rising vaccinations and government aid, although expansion fell short of expectations and rising COVID-19 infections cloud prospects for the current quarter.
Lower-than-expected sales reported by Amazon.com Inc (NASDAQ 🙂 on Thursday and the company’s forecast of slower sales growth in the coming quarters weighed on US stock futures.
Nasdaq’s e-mini futures slipped 1.30% and declined 0.79%.
After the surge in US economic data on Thursday, US Treasury bond yields fell, particularly at the long end of the yield curve.
The benchmark 10-year bond last returned 1.2456%, down from 1.269% late Thursday, and the 30-year return was 1.9013%, down from 1.916% Thursday.
The spread between 10-year and 2-year US yields narrowed to 106.6 basis points.
“We believe bond yields are now ignoring an inappropriately pessimistic view of the medium- to long-term outlook … The prospects for a robust recovery – and higher bond yields – are arguably much better,” Capital Economics analysts said on a client note.
But following Fed Chairman Jerome Powell’s statement earlier this week that rate hikes are “a long way off” and that the labor market still “has some ground to cover”, the dollar wallowed near its one-month low on Friday and was on its worst week since then May.
Most recently, the price rose 0.09% at 91.968 while the euro was down 0.06% at $ 1.1879. The greenback was 0.1% higher against the yen at 109.57.
In the commodity markets, oil prices fell after the global benchmark Brent topped $ 76 a barrel on Thursday due to tight US deliveries.
Brent fell 0.53% to $ 75.65 a barrel and US West Texas Intermediate crude was down 0.52% to $ 73.24. is still up nearly 2% for the week.
Little changed at $ 1,827.31 an ounce but set to best week in more than two months on prospect of a delayed Fed throttling.